Coke CEO: Sodas not to blame for U.S. obesity

Las Vegas — Coca-Cola Co.’s top executive urged the beverage industry Monday to step up its fight against claims that it bears much of the blame for the nation’s obesity problem, especially since the souring economy and health concerns over carbonated beverages could shrink U.S. drink sales this year.

In one of his first major speeches since taking the top job at the world’s biggest beverage company in July, Coca-Cola CEO Muhtar Kent told industry leaders gathered here that it was “absolutely imperative” for them to work together to “return responsible discourse back into the obesity debate.

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ADRIAN MOSER/Bloomberg News

Muhtar Kent became Coca-Cola’s CEO in July.

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“People need to understand that obesity is not about a beverage or a candy bar or a restaurant meal or a Play Station game or about working longer hours,” Kent said in prepared remarks for his keynote address at the InterBev 2008 conference. “It’s a systematic lifestyle issue that we must address individually and collectively as a society.”

Kent pointed out in his speech that calories in non-alcoholic drinks have declined by nearly 25 percent in the past decade. Not coincidentally, his speech was preceded by a pitch from the Corn Refiners Association, which has launched a major campaign to downplay health concerns surrounding the high-fructose corn syrup used in many soft drinks.

Some critics were quick to take issue with Kent’s comments.

“It sounds like the CEO of Coke is sticking his head in the sand by denying that obesity is related to soda pop,” said Michael Jacobson, executive director of the Washington, D.C-based Center for Science in the Public Interest, a longtime soft drink critic. “(Non-diet) soda pop isn’t the only cause of obesity, but it’s a very significant contributor.”

Health concerns and a slowing global economy are partly to blame for what’s expected to be the first-ever decline in U.S. beverage sales this year, according to research and consulting firm Beverage Marketing Corp.

Despite sales increases for water and health-related drinks, an expected 3 percent decline in carbonated beverages such as Coke and Pepsi will likely drag overall sales of non-alcoholic beverages down by about 1 percent this year, Gary Hemphill, managing director of Beverage Marketing Corp., said at the InterBev conference.

Atlanta-based Coca-Cola, like other companies, is beginning to take steps to address a slowing economy. The company has said it plans to cut $500 million in expenses by 2011, in part through job reductions.

But Coca-Cola has no plans for massive layoffs like the 3,300 job cuts that archrival PepsiCo Inc. announced recently, Coca-Cola spokesman Dana Bolden said Monday.

Instead, Bolden said, Coca-Cola’s expense-cutting is being handled on a department-by-department basis. As a result, some jobs may be cut from various parts of the company’s business over the next several years, but it won’t be on a wide-scale basis like at PepsiCo, Bolden said.

Coca-Cola also expects to find significant savings in other parts of the company, Kent said in his speech.

“We have a $50 billion system-wide global supply chain,” he said. “Optimizing our supply chain to create even a 2 percent saving would result in a billion dollars straight to our bottom line.”

Coca-Cola also is benefiting from growth in overseas markets that is helping offset slowing U.S. sales.

Last week, it announced a better-than-expected 14 percent increase in third-quarter net income, mainly because strong growth overseas offset slowing domestic growth.

While his company and the rest of the beverage industry may be facing difficult economic times, it’s not the first time, Kent said.

“It’s tough out there,” he said. “I know it. You know it. It’s probably true that it will get even tougher before it gets better.”

Even so, Kent said that current economic problems and sentiment in America are not much different than 30 years ago, when he first joined Coca-Cola.

“As scary as it sounds, we’ve been in this place before and we prevailed,” Kent said. “And we will prevail again.”